NY Trustee Alleges Fraudulent Conveyance by Diamond Finance
May 18, 2022, Bankruptcy Court Eastern District of New York – Marc Pergament, as Chapter 7 trustee (“Trustee”) of the bankruptcy estate of Diamond Finance Co., Inc. (“Debtor”) brings an action against Auto City International, Inc. and 2840 LLC for money damages and for the avoidance and recovery of fraudulent transfers of the Debtor’s property.
The Trustee avers that Robert Diamond, the CEO of the Debtor company, used his control over the Debtor to transfer funds from the Debtor to Defendant Auto City International, Inc (“Auto City”). Through Auto City, Richard Diamond arguably diverted the funds to himself, his “accomplices” and other affiliated companies, including Defendant 2840 LLC.
The complaint alleges that the Debtor was insolvent since 2013 and that Richard Diamond was using the Debtor company as a vehicle for a “Ponzi scheme”. It alleges the “fraudulent transfers” made to Auto City to be around $3,343,682.00 for which the Debtor received “nothing of value” in exchange.
The Trustee claims that 2840 LLC was a subsequent, immediate or mediate transferee of Auto City “fraudulent transfers” which it did not take for value or in good faith.
Trustee requests a full and complete accounting of Defendants’ use of the “fraudulent transfers” and the “subsequent transfers” and seeks to avoid and recover these transfers from the Defendants.
Marc A. Pergament, Chapter 7 Trustee v. Auto City International, Inc. AND 2840 LLC and John Does 1-10 (In re Diamond Finance Co., Inc.), AP No. 22-8037, US Bankruptcy Court Eastern District of New York.